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Obama on 'milestone' education bill

— From NBC's Ali WeinbergAt his second bill-signing ceremony in two weeks, President Obama today signed into law legislation that not only "fixes" the already-passed health-care overhaul but also reforms the student loan system.

Obama said that this student loan reform, when paired with the health-care law, represented the ability of Washington to overcome political gridlock and accomplish major legislation.

"Today we mark an important milestone on the road to health insurance reform and higher education reform. But more broadly, this day affirms our ability to overcome the challenges of our politics and meet the challenges of our time," the president said, speaking to a boisterous crowd at Northern Virginia Community College, an institution where Dr. Jill Biden, the vice president's wife, teaches English. Dr. Biden also introduced Obama at the event.

Obama said that the legislation he signed into law today -- the Health Care and Education Reconciliation Act -- will end government subsidies to banks to provide loans to college students, transferring that responsibility to private companies under contracts with the Department of Education. Ending those subsidies will free up $68 million for deficit reduction and college affordability, he said.

"For almost two decades we've been trying to fix a sweetheart deal in federal law that allows banks to act as unnecessary middle men," Obama said, taking a lexical cue from Republicans criticizing state-specific deals in the health-care legislation designed to get holdout conservative Democrats on board.

The legislation will also invest more than $40 million in Pell Grants, and increase the amount of individual grants to almost $6,000, which Obama said would prevent inflation from eroding the value of the grants.

Students who have graduated will face relaxed loan repayment rules beginning in July 2014. Borrowers will be able to cap their repayments at 10 percent of their discretionary income and have the balance forgiven after 20 years if they keep to their repayment schedule.

President Obama added that the legislation would make it easier for students to fill out the Application for Federal Student Aid (FAFSA).

"It shouldn't take a Ph.D. to apply for financial aid," Obama quipped.